A container terminal in Nanjing, China on January 14. (Chinatopics via AP)
key takeaways:
- A three-day USTR hearing on proposed tariffs involving forced labor enforcement began in Washington on July 7, with testimony from officials, industries, and foreign governments.
- The USTR recommended imposing a 10% to 12.5% tariff on imports from 60 countries, arguing that weak forced-labor restrictions burden American commerce, though critics dispute the evidence and costs.
- Testimony will continue through July 9, with stakeholders debating the impacts, as the administration signals plans to reinstate the broader tariffs before the temporary 10% global levy expires.
A three-day hearing on the US Trade Representative’s latest plan to impose tariffs on major trading partners begins in Washington on July 7.
The US launched an investigation into the forced labor prohibition policies of 60 countries in March, citing a law that authorizes tariffs on countries that unfairly burden US commerce. That basis is considered more legally sound than the emergency power used by President Donald Trump last year to impose tariffs, which the Supreme Court ruled illegal in February.
The USTR determined in early June that each economy examined failed to “impose and effectively enforce forced labor import prohibitions”, and recommended that an additional 10% or 12.5% duty be imposed on goods imported into the US from those economies.
As part of the process, dozens of stakeholders will make their case for or against the duties to US trade officials. White House officials have already made clear they plan to use forced labor and other checks to restore import taxes to levels under Trump’s emergency tariffs.
Meanwhile, the administration has a temporary 10% global tariff in place that expires at the end of this month.
A separate USTR hearing on Brazil’s policies and practices is also taking place this week, and Flavio Bolsonaro, a Brazilian senator and son of former President Jair Bolsonaro, is scheduled to testify on July 7. He is expected to urge the Trump administration not to impose new tariffs on Brazilian exports or target PIX, the country’s popular instant payment system, ahead of the October election.
“The proposed tariffs would reward the very criminals they seek to punish,” Bolsonaro wrote in a filing to the USTR. He argued that these measures would benefit President Luiz Inácio Lula da Silva, whose popularity had soared after American pressure was first perceived as an attack on Brazilian sovereignty.
calendar for the week
7th July
In a first in the forced-labor lineup, USTR will hear from a panel of government officials, including Mexico’s Ernesto Acevedo Fernandez, on “How Mexico’s USMCA Forced Labor Mechanism Effectively Enforces Our Forced-Labor Import Prohibition.”
Diplomats and trade officials from Chile, Ecuador, Guatemala, Guyana, Honduras and Peru are also set to speak.
The second panel will include the American Line Pipe Producers Association and the Steel Manufacturers Association. The groups will testify in favor of duties to counter the flood of imports of steel mills and steel-containing products, partly due to low labor standards and the absence of import restrictions on goods produced with forced labor.
The American Petroleum Institute will ask the USTR to eliminate tariffs on industrial inputs critical to the oil and gas industry, which the lobby group says have no connection to forced labor and “cannot be obtained domestically at all or in sufficient quantities by the industry responsible for meeting the Trump administration’s goal of U.S. energy dominance.”
Later, according to prepared testimony shared with Bloomberg News, a former USTR official will argue that these investigations circumvent the intended use of Section 301 of the Trade Act of 1974.
Ed Gresser, now vice president and director of trade and global markets at the Progressive Policy Institute, said, “Senior administration officials have described their objective not as addressing unfair ‘actions, policies, and practices’ that burden American commerce, but rather to recreate the tariff rates set under last year’s illegal ‘IEEPA’ orders.”
Graesser is prepared to argue that the USTR report does not prove that the economies listed buy imports of goods made with forced labor, nor that they burden American commerce. “Therefore, the tariffs he recommends – again, amounting to approximately $100 billion a year in new costs to Americans – are unfair and should not be tolerated,” Graesser said.
8th July
The Coalition for Fair Trade in Seafood will demand additional higher rates on seafood from Vietnam, particularly in the processing industry, which the group says is particularly vulnerable to forced and child labor.
Representatives from India, Jordan and Pakistan are also scheduled to speak.
Cox Fleet’s Kevin Clark discusses how fleets must rethink their maintenance strategies to remain efficient and flexible. Tune in by going above or RoadSigns.ttnews.com.
Pakistan’s representative is expected to argue that USTR’s recommendations are “disproportionate given the absence of evidence of forced labor in Pakistani export goods and the import prohibition enacted by Pakistan.”
Human rights groups, including China Labor Watch, will be required to testify. China Labor Watch would argue that “any preferential tariff treatment, including the proposed textile mechanism or similar sector-specific mechanisms, should only apply to products that can be credibly and independently verified to be free of forced labor.”
9th July
The hearing will conclude with remarks from the Footwear Distributors and Retailers of America and the National Council of Textile Organizations, which joins the panel of U.S. cotton producers.
Government representatives from South Korea, Sri Lanka and South Africa will also speak on the panel, including a representative from Vietnam, who will take issue with the finding that the country has “failed to implement and effectively enforce measures that address forced labour.”
Finally, trade officials will hear testimony from various segments of the economy, including the American Trailer Manufacturers Alliance, cookware brand Le Creuset, the Cigar Association of America and medical device companies.
Le Creuset told USTR in a filing that the company employs about 800 people in the U.S., despite not manufacturing its cookware domestically. The company said, their enameled cast iron cookware product “presents no risk to U.S. manufacturing due to the fact that there is no comparable domestic production of such premium enameled cast iron cookware to meet demand.”
